http://www.bloomberg.com/apps/news?pid=206...hLrqJM&refer=usBloomberg.ComWorld Bank Unit Urges Quick Decision on Wolfowitz (Update2)
By William McQuillen and Christopher Swann
April 27 (Bloomberg) -- A group of World Bank employees who oversee the agency's campaign to fight corruption in poor nations urged ``clear and decisive actions'' in the probe of President Paul Wolfowitz's decision to arrange a promotion and pay raise for his companion.
``We are deeply concerned by the impact of the current leadership crisis on the bank's credibility and authority,'' 46 employees said yesterday in a letter to Wolfowitz and the bank's board. ``Our own governance standards must be upheld and enforced impartially and without exception,'' the letter said, ``even when they touch the highest levels of this institution.''
The former U.S. deputy defense secretary has made fighting graft a hallmark of his tenure, suspending loans to countries including Chad and India because of concerns that the money might disappear into the pockets of corrupt politicians.
In their letter, the members of the Washington-based agency's Governance and Anticorruption Strategy group said the ``credibility of our front-line staff'' had been undermined. They asked the board ``to resolve this crisis quickly in a way that demonstrates to all our stakeholders the bank's commitment to the highest standards of integrity.''
Three months after Wolfowitz became head of the bank in June 2005, his companion, Shaha Riza, was transferred to the State Department under rules that forbid one partner from supervising another. At the same time, she received a promotion and a 36 percent pay raise while remaining on the World Bank payroll.
Demands Rebuffed
``It is a problem when your own resident experts on corruption are stating that the bank is not practicing what it preaches,'' Manish Bapna, director of the Bank Information Center, a Washington-based organization that monitors the agency, said in an interview.
Wolfowitz initially offered to recuse himself from dealings with Riza, a request that was rejected by the board's ethics committee, according to his attorney, Robert Bennett. His subsequent decision to promote Riza and reassign her was made with the approval of the committee, Bennett said.
Wolfowitz, 63, will appear before a panel of seven bank directors on April 30, Bennett said today. The panel is to make recommendations on his future to the full 24-member board. The board hasn't provided a timeframe for a decision.
In an interview yesterday, Jorge Familiar, the director representing Mexico and a member of the panel, said its deliberations were ``moving forward,'' and he hoped ``the process would advance soon.'' The other panel members represent France, Ethiopia, China, Norway, the Netherlands and Russia.
Members of the panel have already decided to recommend Wolfowitz's departure, the Washington Post reported today, citing a senior bank official who wasn't named.
`Alice in Wonderland'
Bennett said he was ``deeply troubled'' by that report, comparing it to justice in ``Alice in Wonderland.''
``If this is true, it is grossly unfair,'' Bennett said. ``It reminds me of Lewis Carroll's Red Queen who said the alleged thief of the tarts was certainly entitled to a trial, but she suggested they have the sentence first.''
None of the panel's seven members returned calls seeking comment today.
Riza, 52, also asked in a letter for a delay until next week, Victoria Toensing, her attorney, said in an interview yesterday. ``We wanted a little time to prepare,'' Toensing said. ``We think that is a reasonable request.''
Support is ebbing for Wolfowitz in European capitals. ``The situation is creating internal problems within the World Bank,'' Swiss Economics Minister Doris Leuthard said at an event in Geneva yesterday, according to her spokeswoman, Evelyn Kobelt. ``Mr. Wolfowitz should consider if that is good for the credibility of the World Bank.''
Praise From Bush
The administration of U.S. President George W. Bush, who appointed Wolfowitz, has stood by him. Bush praised him at a White House event this week, saying: ``I appreciate very much the fact that the World Bank is taking the lead in eradicating poverty in places like Africa, and Paul Wolfowitz, thank you for your leadership of the World Bank.''
The bank's Governance and Anticorruption group, which wrote the letter to Wolfowitz, was created more than a decade ago to devise ways to promote good government in the developing nations that receive money from the agency. The bank distributes $23 billion a year on projects from roads to clinics.
Among those who signed the letter were Daniel Kaufmann, a director of the World Bank's training division; Sanjay Pradhan, director of the public-sector group; and Peter Harold, head of the operations-policy department.
Other bank officials have voiced concern that the bank's work has been harmed by the controversy.
`Critical Juncture'
``The institution is at a critical juncture where its development effectiveness is being jeopardized by serious governance problems,'' the director-general of the bank's Internal Evaluation Unit wrote in an April 20 letter to the board.
Bank staff members have complained that Wolfowitz's anti- corruption policies haven't been applied consistently, with some U.S. allies escaping unscathed while adversaries have had aid suspended. Board members have also been angered because aid has been cut off without consulting them.
Wolfowitz has also beefed up efforts to root out malfeasance within the bank, increasing the Department of Institutional Integrity's budget to $14 million from $8 million.
In August, directors ordered a review of the integrity department after staffers complained that its tactics were heavy-handed. Former Federal Reserve Chairman Paul Volcker, who is heading that effort, yesterday announced the names of the committee's five other members and said they plan to issue a report by Sept. 15.
To contact the reporter on this story: William McQuillen in Washington at bmcquillen@bloomberg.net ; Christopher Swann in Washington at cswann1@bloomberg.net .
Last Updated: April 27, 2007 19:27 EDT